Shares in Muthoot Finance gained as much as 9 per cent to a day high of Rs 208.90 on Thursday after the company said that it has acquired 51 per cent stake in Asia Asset Finance PLC, Sri Lanka.
Asia Asset Finance PLC is a deposit taking non-banking financial company in Sri Lanka, which is regulated by Central Bank of Sri Lanka.
George Alexander Muthoot, managing director at Muthoot Finance, told NDTV that "Muthoot Finance took the initiative to invest in the company because they (Asia Asset Finance PLC) wanted to do gold loan business and they wanted a strategic partner in Muthoot."
He added: "We felt that there is lot of value to be added by Muthoot by joining them and that was the reason Muthoot invested in that company. They have now started gold loan business in that company."
Muthoot Finance believes that there is a lot of scope in gold loan business in Sri Lanka as economic activity in that country has improved and people are interested to borrow against gold.
Muthoot Finance is also looking towards increasing its stake in the company by pumping more capital.
The company has paid around Rs 30 crore to acquire the stake and the deal has been funded by internal accruals, said Mr Muthoot.
As of 1.30 p.m., shares in Muthoot Finance traded 6.47 per cent higher at Rs 204.80 apiece, outperforming the Nifty, which was down 0.21 per cent.